From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
Commentary for 10/7/11
The USD has declined 3 straight days, as did the TLT, while crude oil has advanced 3 straight days, as have Stocks and commodities, so the inter-market correlation is in sync. The SPX has advanced +8.4% low to high from the 1074.77 intraday low on Tues to the 1164.97 close today. The extent of the sharp reversal after taking out the 1101.54 magnet low and .382RT to 667 from 1370.58 indicates significant short covering, and an over reaction to Euro Zone rumor news in a very O/S market.
The SPX monthly 5 RSI was down to 21.35 at the end of Sept as opposed to 85.01 at the 1370.58 high on 5/2/11, which was a significant Pi symmetry time zone. There is very often a quick reversal after a significant level is taken out, but then the market resumes the direction of the trend, which right now remains down. Going into yesterday less than 20% of the S&P 500 index stocks were above their 200DMA, while the SPX had taken out the 1101.54 low, as expected, making an intraday 1074.77 low and 1099.23 close on Mon. That was also the case for the INDU, IWM, NYA, MDY, and most everything else, especially the commodity sectors.
The most signifificant factor about this immediate convenient “magic rally” of about 90 points off the 1074.77 low is that 70% of the rally came in the last 50 min on Tues [44 points], +8 points in the last 35 min on Wed, and about +11 points in the last 35 min today. It certainly looks as if the PPT was involved in pushing this rally, because the last thing the Obama gang needs right now is a significant market collapse, which would seal the deal for making him a one term President.
Obama`s class warfare tactics have prompted the uninformed and brainwashed college kids to start unrest in the streets, and are now joined by some union accelerators. He has successfully [short term] demonized the Banks/Wall Street for the crisis, which is what Govt always does to take the blame off themselves.
The counrty is once again in an economic downturn and once more we hear how the rich do not pay their fair share when it is always about Govt spending more than they should, blaming the people as always. No matter how much the people paid in taxes it is never going to be enough [M. Armstrong] The bottom line is that the Govt can take all of the money from those making $250,000 or more it it still won`t make a difference because the Govt will keep spending and driving the total interest on the debt higher, of which 40% of those interest payments go overseas and do nothing for the US economy directly.
The trend is down and the odds still favor the SPX getting down to the .50RT to 667 from 1370.58 at 1019, or the .618RT at 936.
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